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Coin World reports:
As an unprecedented week in the modern history of the US presidency draws to a close, the cryptocurrency industry seems to have scored an unexpected victory: President Joe Biden’s administration has been widely criticized for being hostile to cryptocurrencies, but now, due to concerns about his age and cognitive abilities, he faces immense pressure to drop out of the 2024 presidential election.
However, if such a scenario were to actually occur—if Biden were to withdraw from the race or even resign from the presidency—would cryptocurrencies still be considered an archenemy by Gary Gensler, the chairman of the US Securities and Exchange Commission (SEC)?
Gensler is widely regarded as the driving force behind the agency’s years-long pursuit of US cryptocurrency exchanges, DeFi projects, and software developers, having been nominated by Biden as the chairman of the SEC in 2021. His five-year term is set to expire in 2026.
Should Biden withdraw from the 2024 race or resign completely, history and existing regulations suggest that the Democratic Party’s successor might ask Gensler to step down from his leadership role, but things could quickly become complicated.
The SEC is composed of five commissioners: three from one political party—usually the president’s party—and two from another. Each commissioner is nominated by the president and must be confirmed by the US Senate, with terms staggered over five years. For example, like the Chief Justice of the US Supreme Court, the chairman of the SEC is directly nominated to the leadership position to replace the predecessor.
In the 1930s, in response to then-President Franklin Roosevelt’s attempt to reorganize the Federal Trade Commission (FTC), the Supreme Court ruled that the president cannot remove any administrative agency commissioner unless they exhibit “inefficiency, neglect of duty, or malfeasance in office.”
Crucially, however, a new president does indeed have the authority to nominate an existing SEC commissioner to serve as the chairman of the SEC and to demote the current chairman.
What does all this mean for Gensler? Let’s consider the most extreme potential scenario: under increasing pressure from Democratic donors, voters, and colleagues, Biden could decide as early as next week not only to stop campaigning for re-election but also to resign from the presidency.
In this theoretical scenario, his doing so would be both to protect his legacy and to enhance the legitimacy of his vice president and successor, Kamala Harris. The cryptocurrency prediction market Polymarket currently lists Harris as the most likely Democratic presidential candidate.
If Harris becomes acting president later this month, she would not be able to remove Gensler from the SEC without cause. Whether she would be willing to is also questionable.
But she could demote Gensler and promote one of the other two Democratic commissioners at the SEC to the position of chairman.
However, cryptocurrency advocates might not want to set off fireworks just yet. First, history shows that presidential successors rarely exercise this power. After John F. Kennedy was assassinated in 1963, Lyndon Johnson ascended to the presidency and continued to serve as Kennedy’s chairman of the SEC. After Nixon resigned due to the Watergate scandal in 1974, Gerald Ford took over from Richard Nixon and did not touch the position.
Gensler’s current Democratic colleagues at the SEC may be more hostile to the cryptocurrency industry than he is, making the dream of cryptocurrency less likely.
In January of this year, when Gensler chose to approve a Bitcoin ETF, his Democratic colleague Caroline Crenshaw publicly opposed the approval. She criticized the cryptocurrency market as a “hotbed of fraudulent activity.” Crenshaw’s term is also set to expire this year.
Another Democratic commissioner at the SEC, Jaime Lizárraga, previously served as a senior advisor to former House Speaker Nancy Pelosi. He has echoed many of Gensler’s positions on regulating cryptocurrencies, including that most digital asset tokens are likely securities.
Ultimately, the historic turmoil currently plaguing the Democratic Party may not immediately affect the composition of the SEC or the fate of the cryptocurrency industry. But whoever is sworn in as president in January 2025, whether it be Biden, Harris, or former President Donald Trump, will be in a key position to determine the status of cryptocurrencies in the United States for decades to come.
Edited by Andrew Hayward
